SEMAFO Reports Cash Flow from Operations of $107 Million in 2017

6.3.2018 23:56 | GlobeNewswire

Del

Net Income Attributable to Equity Shareholders of $20.0 Million

MONTREAL, March 06, 2018 (GLOBE NEWSWIRE) -- SEMAFO Inc. (TSX:OMX) (TSX:SMF) today reported its financial and operational results for the fourth quarter and year ended December 31, 2017. All amounts are in US dollars unless otherwise stated.

2017 - The Year in Review

Gold production of 206,400 ounces compared to 2016 production of 240,200 ounces

Total cash cost1 of $655 per ounce sold and all-in-sustaining cost1 of $942 per ounce sold

Gold sales of $259.0 million compared to $300.5 million in 2016

Net income attributable to equity shareholders of $20.0 million compared to $34.2 million in 2016

Cash flows from operating activities2 of $107.0 million compared to $142.2 million for the same period in 2016

Drawdown of incremental $60.0 million from Credit Facility with Macquarie Bank Limited in June 2017

Fourth Quarter 2017 - in Review

Gold production of 49,500 ounces compared to 55,100 ounces for the same period in 2016

Gold sales of $63.0 million compared to $69.1 million for the same period in 2016

Total cash cost1 of $667 per ounce sold and all-in-sustaining cost1 of $982 per ounce sold

Net income attributable to equity shareholders of $1.6 million compared to net loss of $4.9 million for the same period in 2016

Cash flows from operating activities2 of $25.4 million compared to $30.4 million for the same period in 2016

1 Total cash cost and all-in sustaining cost are non-IFRS financial performance measures with no standard definition under IFRS. See the "Non-IFRS financial performance measures" defined at the end of this press release.2 Cash flows from operating activities exclude changes in non-cash working capital items.

Mana, Burkina Faso

Mining Operations

2017

2016

Variation

Operating Data

Mining

Waste mined (tonnes)

16,913,100

16,686,800

1

%

Ore mined (tonnes)

2,268,100

2,175,700

4

%

Operational stripping ratio

7.5

7.7

(3

%)

Capitalized Stripping Activity

Waste material - Siou (tonnes)

12,607,300

12,263,200

3

%

Waste material - Fofina (tonnes)

-

2,820,300

(100

%)

Waste material - Wona (tonnes)

9,189,900

3,252,400

183

%

21,797,200

18,335,900

19

%

Total strip ratio

17.1

16.1

6

%

Processing

Ore processed (tonnes)

2,136,100

2,329,500

(8

%)

Low grade material (tonnes)

603,800

423,800

42

%

Tonnes processed (tonnes)

2,739,900

2,753,300

-

%

Head grade (g/t)

2.46

2.88

(15

%)

Recovery (%)

95

94

1

%

Gold ounces produced

206,400

240,200

(14

%)

Gold ounces sold

205,300

240,600

(15

%)

Statistics (in dollars)

Average realized selling price (per ounce)

1,261

1,249

1

%

Cash operating cost (per tonne processed)¹

46

43

7

%

Total cash cost (per ounce sold)¹

655

548

20

%

All-in sustaining cost (per ounce sold)¹

942

720

31

%

Depreciation (per ounce sold)²

460

324

42

%

The total cash cost1 of $655 per ounce sold and all-in sustaining cost1 of $942 per ounce were anticipated and are both due to a lower head grade and higher cash operating cost per tonne1, the latter being mainly caused by negative foreign exchange fluctuations.

The year-over-year variation in head grade in 2017 resulted from geological issues in the upper portion of Zone 9 early in the year. In addition, the variation is due to the processing of 603,800 tonnes of low-grade material not included in our reserves. This results from the decision to take advantage of higher gold prices and available milling capacity in order to generate additional cash flow. Without this, the head grade would have been 2.96 g/t Au.

The 2017 increase in depreciation in property, plant and equipment and depreciation per ounce sold mainly reflects a higher capitalized stripping ratio from Siou at depth compared to the same period in 2016.

1 Cash operating cost, total cash cost and all-in sustaining cost are non-IFRS financial performance measures with no standard definition under IFRS. See the "Non-IFRS financial performance measures" defined at the end of this press release.2 Depreciation per ounce sold is a non-IFRS financial performance measure with no standard definition under IFRS and represents the depreciation expense per ounce sold.

2017 Reserves and Resources

As at December 31, 2017, total proven and probable mineral reserves stood at 29.4 million tonnes averaging 3.37 g/t Au for 3.2 million ounces as compared to 28.2 million tonnes at 3.31 g/t Au for 3.0 million ounces at the end of 2016. The increase in reserves is due to additions at Boungou and Mana, with the latter offset by SEMAFO production of 206,400 ounces of gold in 2017.

Measured and indicated mineral resources remained constant at 48.4 million tonnes averaging 2.00 g/t Au for 3.1 million ounces.

Mana Pre-feasibility Study
In the first quarter of 2018, we announced a positive pre-feasibility study (PFS) for Mana that added 188,000 ounces of mineral reserves before depletion, primarily at Siou underground.

The Mana PFS, which investigated the potential for extracting the deeper zone of the Siou deposit through underground operations, envisages pre-production capital of $51.7 million and development start-up in the third quarter of 2018. With mineral reserves of 18.2 million tonnes at 2.92 g/t Au for 1.7 million ounces, Mana annual production should average over 200,000 ounces between 2019 and 2023 at an all-in sustaining cost of $810 per ounce at a gold price of $1,200 per ounce. Access to the 2,000-tpd contract mining operation will be through a single portal and a 5.5- by 5.5-meter ramp at a 14-gradient slope. Given our $222 million cash and restricted cash position at year-end 2017 and anticipated cash flow from operations, pre-production capital expenditure will be financed with existing cash.

2018 Milestones for Development of Siou Underground

Filing of NI 43-101 technical report on SEDAR in first quarter

Negotiation and signing of contract with underground contractor in second quarter

Completion of detailed engineering in second quarter

Commencement of infrastructures work in second quarter

Completion of environmental and social impact assessment and mining permit in third quarter

Mobilization of contractor on site in third quarter

Commencement of portal preparation and underground development in third quarter

Boungou
Total proven and probable reserves at Boungou Mine amounted to 11.2 million tonnes averaging 4.11 g/t Au for 1,5 million ounces of gold, an increase of 16% compared to year-end 2016. The increase in mineral reserves is mainly attributable to the expansion of probable reserves located on the West Flank Sector adjacent to known reserves. An internal trade-off study conducted on the West Flank Sector in 2017 concluded that open-pit mining was a mining approach superior to an underground operation as it provided better financial returns.

All mineral resources reported are exclusive of mineral reserves. Gold price assumptions for mineral reserves and resources at Mana and Tapoa (Boungou Mine) were $1,200 and $1,400 per ounce, respectively. For further details, refer to our press release of February 15, 2018.

2018 Exploration

Exploration expenditure for 2018 has been set at $26 million, $9 million of which will be spent at Tapoa (Boungou), $7 million at Mana, $4 million at Nabanga, $3 million at Bantou and the remaining $3 million at Korhogo.

The 2018 exploration at Mana includes 10,000 meters of core, 25,000 meters of reverse-circulation ("RC") and 60,000 meters of auger drilling. The core drill program will primarily target the Siou area with the aim of assessing the north part of Siou at depth. The Bara Trend located some 20 kilometers from the Mana mill will see extensive drilling in the first quarter, including follow-up work on significant RC results and untested auger anomalies.

At Boungou, the 2018 exploration program comprises 42,000 meters of RC and 60,000 meters of auger drilling. The bulk of the RC drill work will test regional gold anomalies on the Boungou proximal, Dangou, Pambourou and 045 Trend Sectors.

The 2018 core drill program at the Nabanga deposit, which will be carried out in the first half of the year, will test lateral and at-depth extension of the mineralization. Furthermore, the Corporation will carry out core and RC drill programs on the Korhogo and Bantou areas following a series of prospective results in 2017.

Update on Boungou Mine Construction

Construction of the Boungou Mine continues to advance on time and on budget. As at January 31, 2018, the following achievements had been made:

Addition of 203,000 ounces of reserves

Development on budget with $171 million of the $231 million capital expenditure incurred

Construction 83% completed

Cash and restricted cash of $222 million as at December 31, 2017

Completion of about 90% of structural steel, 85% of mechanical and 22% of piping installation

Installation of the liner on the water storage facility

Tailings storage facility 72% completed

Completion of 81% of the fuel depot and 83% of the power plant

Pre-stripping 62% completed with 11.2 million of the projected 18 million tonnes extracted

Installation of the SAG mill completed

4.1 million man-hours have been worked without lost-time injury

2,027 personnel including contractors were employed on site, 86% of which are Burkinabe

SEMAFO's Management's Discussion and Analysis, Consolidated Financial Statements and related financial materials are available in the "Investor Relations" section of the Corporation's website at www.semafo.com. These and other corporate reports are also available on www.sedar.com.

Fourth Quarter and Year-End 2017 Conference Call

In view of the pre-announced 2017 results and the February 16, 2018 conference call on the Mana PFS and multi-plan targets, no conference call has been scheduled for tomorrow. Parties with questions are invited to call the IR department.

Annual General Meeting of Shareholders

SEMAFO's Annual General Meeting of Shareholders will be held on Thursday, May 10, 2018 at 10:00 EDT at Club Saint-James, Salon Midway, 1145 avenue Union, in Montreal Quebec. Attendees will have the opportunity to ask questions and meet the management team and members of the board of directors.

About SEMAFO

SEMAFO is a Canadian-based mining company with gold production and exploration activities in West Africa. The Corporation operates the Mana Mine in Burkina Faso, which includes the high-grade satellite deposit of Siou, and is targeting production start-up of the Boungou Mine in the third quarter of 2018. SEMAFO's strategic focus is to maximize shareholder value by effectively managing its existing assets as well as pursuing organic and strategic growth opportunities.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and assumptions and accordingly, actual results and future events could differ materially from those expressed or implied in such statements. You are hence cautioned not to place undue reliance on forward-looking statements. Forward-looking statements include words or expressions such as "envisages", "development start-up", "will", "should", "milestones", "aim of", "prospective", "continues", "pursuing", "growth", "opportunities" and other similar words or expressions. Factors that could cause future results or events to differ materially from current expectations expressed or implied by the forward-looking statements include the ability to develop the Siou underground operation with $51.7 million of pre-production capital, the ability to start the development of the Siou underground operation in the third quarter of 2018, the ability to meet our targets at Mana between 2019 and 2023 with respect to annual production and all-in sustaining cost, the ability meet the 2018 milestones for the development of the Siou underground, the accuracy of our assumptions, the ability to execute a $26 million exploration budget in 2018 at the contemplated properties, the ability to complete the construction of the Boungou mine on time and on budget, the ability to execute on our strategic focus, fluctuation in the price of currencies, gold or operating costs, mining industry risks, uncertainty as to calculation of mineral reserves and resources, delays, political and social stability in Africa (including our ability to maintain or renew licenses and permits) and other risks described in SEMAFO's documents filed with Canadian securities regulatory authorities. You can find further information with respect to these and other risks in SEMAFO's 2017 Annual MD&A, and other filings made with Canadian securities regulatory authorities and available at www.sedar.com. These documents are also available on our website at www.semafo.com. SEMAFO disclaims any obligation to update or revise these forward-looking statements, except as required by applicable law.

The information in this release is subject to the disclosure requirements of SEMAFO under the Swedish Securities Market Act and/or the Swedish Financial Instruments Trading Act. This information was publicly communicated on March 6, 2018 at 5:00 p.m., Eastern Standard Time.

Cash flows from operating activities exclude changes in non-cash working capital items. See the "Non-IFRS financial performance measures defined at the end of this press release.

3

When there is a net loss attributable to equity shareholders, diluted loss per share is calculated from the basic weighted average number of outstanding common shares because the effect of options is anti-dilutive.

Non-IFRS Financial Performance Measures

Some of the indicators used by us to analyze and evaluate our results represent non-IFRS financial measures. We provide non-IFRS financial performance measures as they may be used by some investors to evaluate our financial performance. Since the non-IFRS performance measures do not have any standardized definition prescribed by IFRS, they may not be comparable to similar measures presented by other companies. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For the non-IFRS financial performance measures not already reconciled within the document, we have defined the IFRS financial performance measures below and reconciled them to reported IFRS measures.

Cash Operating Cost
A reconciliation of cash operating cost calculated in accordance with the Gold Institute Standard to the operating costs is included in the following table:

Share-based compensation (recovery) expense related to change in the fair value of the share price

(835

)

1,990

Impairment of property, plant and equipment

-

8,913

Adjusted net income attributable to equity shareholders

864

48,109

Weighted average number of outstanding shares

324,894

315,290

Adjusted basic earnings per share

-

0.15

2017

2016

(in thousands)

$

$

Operating income as per IFRS

11,494

60,086

Share-based compensation (recovery) expense related to change in the fair value of the share price

(835

)

1,990

Impairment of property, plant and equipment

-

8,913

Adjusted operating income

10,659

70,989

Consolidated Statements of Financial Position

(Expressed in thousands of US dollars)

As at

As at

December 31,

December 31,

2017

2016

$

$

Assets

Current assets

Cash and cash equivalents

198,950

273,772

Trade and other receivables

22,649

16,945

Income tax receivable

3,186

-

Inventories

66,409

51,391

Other current assets

4,094

2,513

295,288

344,621

Non-current assets

Advance receivable

2,867

3,060

Restricted cash

23,237

5,689

Property, plant and equipment

703,341

536,237

Intangible asset

1,374

1,595

Other non-current assets

2,256

4,074

733,075

550,655

Total assets

1,028,363

895,276

Liabilities

Current liabilities

Trade payables and accrued liabilities

72,720

41,964

Current portion of long-term debt

310

310

Current portion of finance lease

4,703

-

Share unit plans liabilities

6,404

6,635

Provisions

3,069

3,271

Income tax payable

-

5,422

87,206

57,602

Non-current liabilities

Long-term debt

115,247

56,726

Finance Lease

19,008

-

Share unit plans liabilities

3,138

4,899

Provisions

12,258

8,137

Deferred income tax liabilities

30,944

32,329

180,595

102,091

Total liabilities

267,801

159,693

Equity

Equity Shareholders

Share capital

622,294

621,902

Contributed surplus

7,220

7,357

Accumulated other comprehensive income

2,256

1,095

Retained earnings

97,710

77,674

729,480

708,028

Non-controlling interests

31,082

27,555

Total equity

760,562

735,583

Total liabilities and equity

1,028,363

895,276

Consolidated Statements of Income

For the years ended December 31, 2017 and 2016

(Expressed in thousands of US dollars, except per share amounts)

2017

2016

$

$

Revenue - Gold sales

258,993

300,483

Costs of operations

Mining operation expenses

134,385

131,953

Depreciation of property, plant and equipment

94,722

78,323

General and administrative

14,069

13,953

Corporate social responsibility expenses

1,097

960

Share-based compensation

3,226

6,295

Impairment of property, plant and equipment

-

8,913

Operating income

11,494

60,086

Other expenses (income)

Finance income

(3,294

)

(2,171

)

Finance costs

1,309

1,938

Foreign exchange (gain) loss

(9,528

)

1,144

Income before income taxes

23,007

59,175

Income tax expense (recovery)

Current

4,181

16,408

Deferred

(4,737

)

1,500

(556

)

17,908

Net income for the year

23,563

41,267

Attributable to:

Equity shareholders

20,036

34,219

Non-controlling interests

3,527

7,048

23,563

41,267

Earnings per share

Basic

0.06

0.11

Diluted

0.06

0.11

Consolidated Statements of Cash Flows

For the years ended December 31, 2017 and 2016

(Expressed in thousands of US dollars)

2017

2016

$

$

Cash flows from (used in):

Operating activities

Net income for the year

23,563

41,267

Adjustments for:

Depreciation of property, plant and equipment

94,722

78,323

Share-based compensation

3,226

6,295

Unrealized foreign exchange loss (gain)

(9,480

)

358

Impairment of property, plant and equipment

-

8,913

Deferred income tax expense (recovery)

(4,737

)

1,500

Adjustment for withholding taxes

-

5,827

Other

(271

)

(261

)

107,023

142,222

Changes in non-cash working capital items

(30,115

)

6,558

Net cash provided by operating activities

76,908

148,780

Financing activities

Drawdown (repayment) of long-term debt

60,000

(30,000

)

Long-term debt transaction costs

-

(259

)

Repayment of equipment financing

(310

)

(129

)

Payments of finance lease

(5,128

)

-

Proceeds on issuance of share capital, net of expenses

255

92,017

Dividend paid by a subsidiary to non-controlling interest

-

(10,359

)

Net cash provided by financing activities

54,817

51,270

Investing activities

Acquisition of property, plant and equipment

(201,346

)

(90,890

)

Increase in restricted cash

(16,808

)

(1,390

)

Net cash used in investing activities

(218,154

)

(92,280

)

Effect of exchange rate changes on cash and cash equivalents

11,607

(1,164

)

Change in cash and cash equivalents during the year

(74,822

)

106,606

Cash and cash equivalents - beginning of year

273,772

167,166

Cash and cash equivalents - end of year

198,950

273,772

Interest paid

6,576

4,150

Interest received

3,360

1,608

Income tax paid

12,109

10,816

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: SEMAFO Inc. via Globenewswire

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